The Nigerian Central Bank has announced an increase in the supply of dollars in the foreign exchange market and has also lifted the ban on 43 previously ineligible items for official market foreign exchange. This move was prompted by the naira’s decline to 1,050/$ at the parallel market on Thursday, following pressure from international organizations and experts. While unifying exchange rates, the CBN had earlier maintained the ban on these 43 items introduced during the tenure of the former governor, Godwin Emefiele, in June.
Between 2016 and 2022, Nigerians imported goods worth N18.12tn from the CBN’s foreign exchange ban list, according to an analysis of Nigerian Foreign Trade reports. Despite the unavailability of forex for these banned items, Nigerians imported five items worth N543bn in the first quarter of 2023, as reported by The PUNCH.
Various economic experts and organizations have consistently advised the CBN to remove the forex restrictions. Citigroup, in its report, emphasized that removing the restrictions was crucial for fixing the challenges in the forex market. Similarly, the World Bank, in its Nigeria Development Update of June 2023, recommended the CBN to end the forex restriction policy to complement efforts in reducing inflation through a coordinated mix of monetary, fiscal, and trade plans.
The CBN, in response to mounting pressure, lifted the ban on importers of the 43 items from accessing foreign exchange on its official platform. The bank plans to boost liquidity in the Nigerian foreign exchange market through interventions, gradually reducing these interventions as market liquidity improves. The new CBN governor, Olayemi Cardoso, has also outlined plans to review the CBN’s foreign exchange market policies, corporate governance practices, and monetary policies for a comprehensive repositioning of the apex bank to achieve its core mandates.
Manufacturers, farmers, and various stakeholders have responded positively to the CBN’s decision, with the Manufacturers Association of Nigeria lauding the move to lift the ban on blacklisted imports. Nonetheless, there are cautious sentiments regarding the impact of this policy change on the overall food system and inflation rates in the country. The call for effective implementation of policies and market-boosting measures remains a common refrain among experts and stakeholders.